If you’ve been in this industry for any length of time than I’m sure that you get deluged every morning with just as many emails as I do. Sometimes I discover some very interesting facts about the real estate industry and that often includes many of the latest housing facts and figures. Lately I have noticed something interesting that had not occurred to me before. It seems that the short term statistics are basically useless and I wonder why anyone even bothers to report them at all?
If you read as much about the industry as I do, than you know exactly what I’m talking about. Last week you might have read a short article about how cash sales in your area had increased by 5%, this week you can read about how they have decreased by 10% (as compared to last week!) Although these statistics may be completely accurate, they are in fact very misleading to those of us working in the industry. So how can I say that “accurate” figures can be “misleading”?
There’s one thing about real estate that all industry pro’s are sure to agree with; it is the long term changes that make the difference. Week to week fluctuations mean little to nothing in this (or any) market. It is what happens over the course of months or even years that will determine the future. There are very few ways to make a living investing in short term real estate investments. Aside from “flipping” properties profitable short term investments make up a very small percentage of the market and it is for this very reason that daily and weekly stats have very little value to anyone involved with the industry.
I can assure you that the most successful people in this industry are not looking 1 week ahead and then making critical business decisions. They are, in fact, using months and years of past data in an effort to predict what will happen in future months and years. It is the ability to accurately forecast future trends that separates the industry leaders from the novice. It is for this reason that I don’t take short term statistics very seriously and you shouldn’t either. So the next time you read something about how home sales are down 12% in your area, don’t worry about it! Next week (or month) they’ll be back up again.
Short term changes mean nothing in this marketplace. If you can learn to predict what will be happening 6 months or a year from now, then you will have some truly valuable information.